In Civil Court, One Nation, Under Debt  By JIM DWYER

The clerk called out the names of the collection agencies, debt owners, credit card companies.

Arrow Financial Services. Midland Funding.  “Capital One, are you here?”

A young lawyer, Seth Funk, spoke up.

“I’m here,” he said.

It was Friday morning in the Civil Court of New York City, where lawsuits involving up to $25,000 are heard. Mr. Funk had 25 cases on the calendar to collect on credit card debts.

As the final stop on the subprime lending train, the Civil Court has become the 21st-century debtors’ court. Filings have nearly tripled since 2000. Of these, court officials project that about 350,000 this year will involve debt on credit cards. They typically arrived in the mail with “0% interest” printed in gigantic letters on the envelope, and “24%” rendered in type that only an ant could read.

The clerk picked the top file off a stack and called for the collection agency and person being sued.

“North Star Capital Acquisition,” he said. “Juan Vega.”

Mr. Vega, 31, rose. The lawyer for North Star wanted to talk about a settlement. Of the 55 cases on the calendar in Manhattan on Friday, not one defendant had a lawyer; the right to counsel applies only to criminal cases.

About 20 minutes later, Mr. Vega walked out of the courtroom, case closed.

“They said I owed $1,400,” he said. “In the settlement it went down to $900. They told me to pay $50 a month.”

How did he run up $1,400 in debt?

“I heard about this 800 number you could call to get a card,” he said. “I was working as a security guard in Herald Square. It was several years ago.”

What did you buy?

“I bought some shoes,” he said. “My son was young, we got Pampers, things like that.”

At the time, he was making about $11 an hour. How much had he spent?

The shoes, he guessed, were $40. The other stuff was $400 or less.

“They gave me a $500 spending limit,” he said. “So it was less than that. The rest to get it to $1,400 was interest, fees.”

The negotiations had been two sentences long.

“The lawyer said, ‘We can finish this for $900,’ and I said, ‘O.K.,’ ” Mr. Vega said. “It was my first time with a credit card. I do everything by cash now.”

The lawyers for the banks had virtually no documents on the cases, just printouts with names, account numbers and the amount that was supposedly owed. When it was Miranda Gee’s turn, she produced papers showing that she held a different account with Capital One than the one listed on the printout, which claimed that she owed about $1,000.

“They brought me here, but it wasn’t my account at all,” Ms. Gee, 43, said. “They put a hold on my bank accounts with Chase for twice the amount they claimed.”

The judge agreed to sign an order unfreezing her savings with Chase while Capital One investigated to make sure it had the right account. Since Mr. Funk, the bank’s lawyer, had no paperwork, he asked Ms. Gee if he could copy her file. She said yes.

The administrative judge for the Civil Court, Fern A. Fisher, has started a volunteer “lawyer for a day” program, and set up advice centers. Many people who came to the court in Manhattan on Friday said they felt as if they had been treated with respect by the judge and the court clerk.

In an interview, Judge Fisher said some people found themselves in default by simply failing to answer a summons.

“The original lender may have now sold it to a debt collection agency, or a third debt collection agency,” Judge Fisher said. “That’s why some people ignore the papers.”

Earlier this year, the court — rather than the collection agency or bank — began sending out notices, and the response rate improved, she said.

What happens in the civil courts are the last tremors of an economy built around the twin seductions of consumption and debt, a dance portrayed in “In Debt We Trust: America Before the Bubble Bursts,” a 2007 documentary by Danny Schechter.

As Josephine DeLeon, a part-time beautician, left the courtroom on Friday, she reflected on her own vulnerability. Her mailbox, she said, was routinely stuffed with offers of no- or low-interest cards.

“You take it, then they send you a letter increasing your limit to $1,500,” Ms. DeLeon said. “And by the way, we’re now giving you a platinum card. Take this heroin, shoot up this drug, and you can come back and pay me later. It’s very easy. You’re late one time, and that zero percent rate goes to 16. Then it goes to 24. And they put in membership fees. You pay the interest on them, too.”

Her debt of $2,000 had rocketed in a few months to $3,400. She left without settling, saying the bank was being stubborn about collecting every dollar of hidden fees. “They have people on their knees,” Ms. DeLeon said.
 

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Titan Management Services Dupes Marion (IN) Residents

If you drive by the old Leath Furniture building tomorrow you will find a familiar site to our city. It will be vacant. Titan Management Services (TMS) has pulled out and all of the employees of the Marion, IN office have staged a walkout due to non payment of payroll keep your eye on the C-T for the next few days. I'm interested on their take). That's right, a collection agency did not pay its employees. Not only did they not pay the employees, but have continued to hire new employees that they had no intention of paying throughout the last two previous weeks. Isn't that against the law?!?!? These employees were made to believe that the initial delay in payment was due to a "computer glitch" in payroll and everyone would be paid by paper check no later than Monday. It is now Tuesday and the supervisors have finally come clean which has left the office totally empty this afternoon. After obtaining this information I decided to do a little research on the company and boy did I find (by lack of) some information. ALMOST EVERY phone listing for any company listed under TMS or affiliated is now disconnected except for a collection branch in Mason, OH (I guess they haven't heard yet). After speaking with a reporter from the C-T it has become clear that we are dealing with another account management firm who has either closed up shop altogether or is in the process of changing their name due to the pile up of judgments against them.  Look it up for yourself. TMS represents Uni-States Credit Agency, a debt buyer from NY. Good luck trying to pin down an address and working number at the same time. I have also obtained the employee handbook given to its employees upon hiring. All info I have will be passed on through this post for reverse lookup and verification (or lack there of).

Throw http://www.giovelawofficeexposed.com/first.html into your search and see what pops up. There is also some useful info for those of you who have been contacted by a debt collector.

Then try http://www.titanrg.com/index.html  and try dialing some of the #s posted. Hope you have more luck than I did. BTW...the # listed for the Marion branch is false. The working # is 8882795762.According to former employees, the number to Marion office has been changed 3 times in the last 3 months. Which leaves only those being called in regards to the overdue account with an actual working # for TMS. .Why wouldn't they want anyone but the debtor contacting them?

I do have one Georgia # that you will get an answer at. 8882795765. It is the # given to debtors who hold 'Macys' accounts. I spoke to a collector there and they stated they were paid by paper checks that Friday and were instructed to not cash them until the following Monday. "Good luck next week guys" I hope that some of them are smart enough to see where this road goes. A large corp. that needs time to shift money?

Inside the employee handbook the EVP of Corporate Development is listed under...
The Titan Companies
5214 Maryland Way, Ste 306
Brentwood, TN 37027.

If reversed for a phone # I bet you will be as surprised as I was. This information was obtained from the employee handbook. I was unsuccessful in finding a listing for TMS in Brentwood, TN. I found one in Nashville but of course was unable to make contact with ANYONE. Its is also listed as its human resources dept.

While we are at it.......Try the address given to its employees to be passed to the debtor for overnight payments. Taken directly from handout.

Make all payments payable to "Uni-States Collection Agency" 2809 Wehrle Dr. Suite#1, Williamsville, NY. ..Did you find anything in Williamsville? How about Rochester? Its a holding company which will not return calls for questions. In fact, I bet you wont even get an answer, EVER.

Its seems that free rent just wasn't enough for the company to keep its word.   Now, we have 35+ more unemployed Marion residents due to a lack of "evaluation of a prospecting company" Does anyone remember when they first came to town. They stated they would be employing 200 by '07', its even on their website.

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HSBC admits huge data loss in Hong Kong   May 8th, 2008 - DPA Hong Kong

Banking giant HSBC was under fire Thursday after admitting it had lost the data of 159,000 accounts from a Hong Kong branch. The data was held on an Internet server which is understood to have gone missing from the Kwun Tong branch of the bank while it was undergoing renovation last month.

The loss was reported to the police and the Hong Kong Monetary Authority April 26, but many customers affected only learnt of the security breach after reading reports in the local media.

In a statement issued Wednesday, the bank acknowledged a server had disappeared containing the account numbers, names and transaction details of 159,000 accounts.

However, it said the server did not contain customers PIN numbers or user IDs and insisted that the likelihood of anyone gaining access to the data was low, as the server was protected by multiple security systems.

Angry customers turning up at the branch to demand an explanation were told to wait one or two days, to check their accounts regularly and be on their guard against people claiming to be bank employees.

However, chairman of the Legislative Council’s security panel James To said the security breach was “absurd” and warned that the types of data lost would be enough for fraudsters to try and obtain more important information.

“I would not be surprised if someone handed over his or her PIN numbers after receiving detailed transaction records purportedly to be from the bank,” said To.

To said the bank should have gone public with the loss much earlier to alert customers. He called on the Hong Kong Monetary Authority (HKMA) to demand a report from HSBC on the remedial measures it had taken and planned to take.

The HKMA said it had asked the HSBC to contact the affected customers explaining the implications and giving them advice on what steps to take to protect their accounts.
DPA

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The Debt Collector vs. The Widow
Viola Sue Kell thought her Social Security benefits were safe in the bank; She was wrong
Ellen Schultz | June 13, 2008 | Features  Fyffe, Ala. --

Heart surgery halted Viola Sue Kell's work sewing carpets in a rug mill in 2001. It was the end of 40 years of cleaning motel rooms, restaurant jobs, "just hard stuff," says Mrs. Kell, a 64-year-old widow. She applied for Social Security disability, and her monthly $827 benefit now is her only income.

But when Mrs. Kell tried to pay her mortgage and electric bills in 2004, her checks bounced. Every cent of the Social Security check, which went straight to her bank each month, had been taken by a debt collector that had garnished her bank account.

Federal law says creditors can't take Social Security and Veteran's benefits to pay debts. Yet the practice is widespread. There is no established process for enforcing the federal prohibition.

When banks receive a garnishment order, their standard response is to freeze the customer's account. Banks say it's not their job to check whether accounts contain cash from exempt sources. Collectors also don't treat it as their job. So the burden falls on Social Security recipients, typically elderly or disabled, who have suddenly lost access to their bank accounts and have no idea what to do.

In 2003, a debt collector decided Mrs. Kell in Alabama owed $125 on a three-year-old hospital bill. It obtained a court judgment and sent a garnishment order to her bank. The bank froze her account, which contained $679, all from Social Security. "I was scared to death," Mrs. Kell says. "I didn't have any way of getting any money."

At a loss, she looked in the yellow pages for a lawyer. "I'm not very good with things when it comes to law. My husband took care of all that," she says. She found a legal-aid office 60 miles away from her rural home and drove over the mountain with her bank statements and Social Security papers.

What Mrs. Kell didn't know was that account holders can file a claim with a debt collector to have any funds that came from Social Security or Veteran's benefits exempted. But federal law doesn't say who should tell them this. Even Social Security's Web site doesn't.

"The Social Security Administration's responsibility for protecting benefits from legal process ends when the beneficiary is paid," said a spokeswoman. She said if benefits are taken "as part of a legal process," beneficiaries can cite the exemption "as a defense against such actions."

Legal Services Alabama helped Mrs. Kell file an exemption claim, and her bank, First Federal in Fort Payne, Ala., released her account. The bank said it had frozen it because it must comply with court orders. "It's not a bank's place to raise an exemption claim for a customer," said a First Federal lawyer. "It would be overwhelming."

The garnishment process can be rewarding for banks. When they restrain an account, they collect a range of fees -- for imposing the freeze, for the resulting bounced checks, or for short-term loans to prevent bounced checks. If the account contains Social Security, banks commonly collect these fees and their loan repayment out of those exempt funds. Banks argue that the ban on collecting debts out of Social Security benefits doesn't apply to them.

Worsening the problem, paradoxically, is direct deposit of benefit checks. This is meant to make benefits more secure. It means "you can rest assured your money is safe," says the Social Security Web site. Direct deposit became mandatory in 1999 unless beneficiaries opt out, and more than 80% of recipients of regular Social Security use it, as do a majority of disability recipients.

But direct deposit has had an unintended result: an infrastructure that makes it cheaper and easier for collectors to pursue elderly or disabled subjects of old debts. These people can be hard for collectors to find, sometimes because they've moved to retirement areas. But debt collectors, knowing that millions of retirees are having money sent straight to banks, can electronically ask a large bank if a given individual has an account with the bank anywhere in the U.S. If a direct-deposit Social Security account turns up, the collector garnishes it.

Mrs. Kell decided to get her Social Security check by mail, and had to drive 12 miles to cash the check at a Wal-Mart and buy money orders to pay bills. (Later, after her lawyer spoke to the bank, she resumed direct deposit.) She gets food donations from First Baptist Church and free garden seeds from a Methodist group. "I'm pretty well fixed for food," Mrs. Kell says. Once she's done paying off her debts, she says, she hopes to save enough money to visit her husband's grave in Georgia.

While collectors can take many of the steps to garnish an account electronically, it's up to seniors and the disabled to file physical papers to prove their benefits are exempt. As a practical matter, if they don't get help from a lawyer, they may not know their funds are exempt. And depending on the state they live in, if they don't claim an exemption in time -- generally between 10 and 30 days -- benefits that were garnished can be lost for good.

Dolores and Robert Weise moved to a mobile home in Hernando, Fla., from New Windsor, N.Y., three years ago, looking for a cheaper place to live. Robert, a 70-year-old former paper salesman, was fighting colon cancer, and the medical bills "put us down the drain," says Mrs. Weise, 65. She opened an account at a Florida branch of Wachovia Corp., which received their Social Security by direct deposit.

In July 2005, Mrs. Weise tried to withdraw $20 at an ATM for chemotherapy co-payments. But her account was frozen. The bank had received a garnishment order.

Mrs. Weise didn't know Social Security was exempt and the bank didn't tell her, according to an account from her that is supported by correspondence among Mrs. Weise, the bank and the debt collector. The bank told her to take up the matter with the collector, a New York firm called Mel Harris & Associates.

The collector also didn't tell her her funds were exempt, according to Mrs. Weise. But she says it told her that if she authorized her bank to wire it $3,109 for an old credit-card debt, Harris would lift the garnishment order.

Collectors obtain such orders by suing debtors, usually in small-claims court. These clogged courts issue the orders routinely if the named debtor doesn't show up or fight the request, for any reason. Sometimes, the reason is that a summons was sent to an old address. In the Weises' case, the garnishment order shows the summons was sent to an outdated address in New York state.

At her bank, Mrs. Weise says, "I was on my knees. It was like our last dollar. I didn't even have money to buy gas to get home." Distraught, she authorized the bank to send Mel Harris the money. The bank then unfroze her remaining funds, minus a $108 processing fee.

Mel Harris declined to comment. Wachovia said it couldn't comment on a customer because of privacy rules but is "committed to protecting the safety of our customers' funds while complying with state and federal law." It said state codes provide instructions for customers to claim their exemptions. "We are required to honor valid garnishment orders and are simply following the rules and regulations set forth in federal and state laws," said a bank spokesman.

However, the garnishment order for the Weises' account stated: "Funds defined as 'exempt' or otherwise excluded under applicable law must not be restrained under this notice." The Wachovia spokesman said banks "are not in a position to determine the character of funds at any given point in the account."

Garnishment orders often originate with big debt buyers that acquire large portfolios of old debts written off by credit-card firms, retailers and so forth. In the Weises' case, a debt buyer had purchased a batch of old credit-card debts and hired Mel Harris to try to collect them. Debt buyers and collectors obtain millions of garnishment orders each year.

A trade group representing debt buyers said they have "a positive role in the economy, returning to creditors a portion of their investment, which benefits consumers in the form of more credit and lower interest rates." Barbara Sinsley, general counsel of the group, DBA International, added: "It isn't the intention of debt buyers to garnish exempt funds."

Legal-aid offices say they often get calls from frantic seniors wrestling with collectors who've frozen their Social Security money and won't let go. The offices say some collectors appear to automatically deny exemption claims and drag out the process until the oldsters give up or die.

Cloette Rice, 79, faced possible eviction from her nursing home in late 2002 after a collector garnished her bank account three times, seeking repayment of a department-store debt incurred before she had a stroke. A social worker at Ebenezer Ridges Care Center in Burnsville, Minn., repeatedly wheeled Ms. Rice to her office and put her on the speakerphone to the bank, collectors or Social Security. "She was just so completely stressed out about it," says the social worker, Kimberly Worrall.

A legal-aid lawyer filed repeated exemption claims over nine months with the collector, a law firm in Plymouth, Minn., called Messerli & Kramer P.C. The law firm said on more than one occasion that it hadn't received the paper work. It denied the exemption.

At a resulting court hearing, a judge, after a three-month delay, agreed Ms. Rice's funds were exempt and ordered Messerli & Kramer to return $1,472 and pay Ms. Rice $100 for disregarding her claims in bad faith. The law firm did so. But two days later, it filed a garnishment order again -- the fifth time it had done so.

"Mrs. Rice said this caused her more stress than having her stroke," said Kathleen Eveslage, of Southern Minnesota Regional Legal Services. "They basically made her last days hell." In November 2003, she died.

About a year later, Minnesota's attorney general sued Messerli & Kramer, alleging that it repeatedly garnishes accounts containing exempt funds and unlawfully denies exemption claims. Messerli & Kramer said it can't comment during the suit, pending in Dakota County district court.

"These people keep garnishing because they know many will just walk away, especially these poor little old ladies, who need their dollars when they get them," said another target of Messerli & Kramer, Thomas Bender. An 84-year-old disabled veteran of two wars, he uses a walker and a wheelchair, disabilities due partly to a back injury incurred while flying dive-bombing missions in Korea.

For a time, he once collected debts himself, for a credit union. Yet even he didn't know how to protect his Social Security. After his home-based travel-agent business folded in 2001, the Richfield, Minn., widower fell behind on car payments to Ford Motor Credit Co. He surrendered the car, but the creditor turned the remaining debt over to Messerli & Kramer, which demanded he pay a balance of $5,757.

Mr. Bender offered to work out a repayment plan, but the collector got a default judgment against him and garnished his credit-union account, which contained his Social Security and his Veteran's benefits.

He sent an exemption claim, attaching a letter from the Social Security Administration. Messerli & Kramer rejected the claim, saying he had "failed to provide sufficient proof that the funds withheld are exempt."

In an attempt to protect his future checks, Mr. Bender stopped direct deposit. He then had to arrange, a week in advance, to have a bus service for the disabled take him to a bank to cash his check and pay bills. Even though he no longer had the car he'd bought, and although all of his income was exempt from creditors under law, Mr. Bender was determined to pay off the car loan. He filed a bankruptcy petition that enabled him to set up a long repayment schedule, finally paying it off this month.

Many banks say it's too hard to keep track of whether money in accounts is exempt from debt collection. Yet some banks find it possible. Banco Popular says when it gets a garnishment order it looks at account deposits for the past 90 days and if all of them involved exempt funds, it rejects the order. If it finds a mixture of exempt and non-exempt funds, it advises the creditor of this, says the bank, which is based in Puerto Rico and has U.S. and Caribbean operations.

Consumer advocates say banks should be able to keep track because they have complex software that tracks all sorts of other things about accounts. And direct deposits bear electronic tags. One of the Weises' Social Security deposits appeared on their statement as "Automated Credit US Treasury 303 SOC SEC."

Each time banks freeze an account, they charge its holder a processing fee, typically $100. More fees soon follow -- for bounced checks or for instant loans to prevent bouncing.

In 2005, a collector got a judgment against Marlene Butts, 72, a former toll-taker in New York, for $920 of unpaid dental bills. Chase bank froze her account on Sept. 27. It contained $929, mostly from Social Security.

The freeze caused a $53.83 check Mrs. Butts wrote two days earlier to Time Warner Cable to bounce. Chase debited the frozen account a $30 fee for that, reducing the balance to $899.

In the next week, six more checks bounced -- including the Time Warner check again, which Chase resubmitted for payment even though it had frozen the account. Each of these brought another $30 fee to Chase, which also collected $125 for freezing the account. Then came two tiny pre-authorized debits, for $4.15 and for 95 cents. The freeze blocked both, and Chase charged a fee of $30 for each. By Nov. 22, fees had consumed all of the Social Security funds deposited in Ms. Butts's checking account, which were supposed to be exempt from the debt collector anyway.

A spokesman for Chase, a unit of J.P. Morgan Chase & Co., said it couldn't comment on an individual depositor but that if the customer had told the bank about the situation, it could have helped resolve things.

Pennsylvania's Supreme Court recently issued a rule that barred banks from freezing accounts that contain only direct deposits of Social Security. In California, banks may not freeze the first $2,425 of any individual's account that receives such checks, even if it also receives non-exempt funds.

Despite this law, Washington Mutual Inc. in November froze the account of Helen and Martin Yack, which received Social Security and contained just $237. A debt collector was pursuing the Yacks, of Oroville, Calif., for unpaid medical bills dating from Mrs. Yack's pancreas surgery and her 74-year-old husband's treatment for prostate cancer and a heart attack.

"They just took every penny," said Mrs. Yack, 67. "We had no money for food for Thanksgiving. We had to eat what we could find." Asked why it froze the account in view of California law, Washington Mutual said it couldn't comment on a customer's case. Its policy is to "comply fully with all state and federal laws governing garnishments, levies and legal process," said a spokesman, adding: "We do what we can to ensure that our customers understand their rights, but cannot act as their attorney or agent in applying for exemptions."
What did you think?

 

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Have You Already Lost?  By Elizabeth Warren

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Gov. Strickland signs payday loan limit     Industry ponders fighting 28% cap
June 03, 2008  Aaron Marshall  Plain Dealer Bureau

Columbus -- As Gov. Ted Strickland signed a measure capping payday lending rates at 28 percent, Ohio payday lenders explored ways to fight back against the bill they say is a death warrant for the industry.

Joined by legislative leaders and a room full of folks from religious and citizen groups that pushed the legislation capping the high-interest, short-term loans, the Democratic governor signed the legislation, known as House Bill 545, at the Statehouse Monday.

"We will not tolerate individuals being exposed to exorbitant rates, which does contribute to the cycle of indebtedness," Strickland said. The notion that the payday lending industry traps consumers in a cycle of debt by providing loans with annual rates as high as 391 percent was a key argument proponents made for the cap.

Payday lenders in Ohio -- a mushrooming industry that grew into more than 1,500 storefronts statewide in a decade -- had argued that they provided a desirable product. And they said a 28 percent cap would force storefronts to shutter and cost 6,000 jobs in Ohio.

However, Republican legislative leaders said Monday that any payday lending jobs that may be lost by the bill essentially aren't worth trying to keep.

"We want to replace jobs that are taking advantage of people with jobs that help people," said Ohio Senate President Bill Harris, an Ashland Republican.

Lynn DeVault, president of the Community Financial Services Association, a payday lending industry group, issued a statement saying that lawmakers "chose to turn their backs on their constituents and play politics."

"It is a sad day when the opinions of editorial writers and so-called consumer groups count for more than the opinions of the people responsible for putting lawmakers in office," wrote DeVault.

While some payday loan storefronts have already closed in Ohio, there are signs that others in the industry plan to fight the legislation, which takes effect in 90 days. Payday lenders recently retained former Solicitor General Ted Olson to study whether there are grounds for a constitutional challenge to the bill.

Meanwhile, a former Ohio payday lending industry insider said she is hearing that a coalition of payday lenders hopes to mount a repeal drive and accompanying TV and radio blitz.

Chris Browning, who worked for a decade as a payday lending store manager in Mansfield, said she received a flurry of e-mails over the weekend from former colleagues telling her a petition drive is in the works.

"They are going to put petitions in individual offices," said Browning, who testified as a whistleblower against the payday lending industry during Ohio House hearings.

To put the law before Ohio voters for approval, a repeal drive would have to gather 241,375 valid signatures across 44 counties in the state in the next 90 days.

Lyndsey Medsker, an industry spokeswoman, would say only that "companies are looking at all of their options."

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CONSUMER ALERT

IS NCO FINANCIAL IN TROUBLE?

May 22, 2008

What is going on at NCO? Has the increased cost of purchasing junk debts forced them to cut back and purchase the older, out of statute accounts?  Why are they collecting on debts that are 10-15 years old?  Has the market dried up that much? Why are so many NCO collection accounts shifted to India call centers? Will NCO start shutting down U.S. offices to save money like many of their competitors have or will be doing? 

Based on the calls and emails we are receiving it’s difficult to tell if they are in financial trouble, desperate or just stupid enough to think that consumers will pay on old, out of statute debts they buy for pennies.

Since NCO Financial is no longer a publicly traded company, it is difficult to ascertain their financial status. However if they are now forced to purchase debt dating back to the early 1990s, one could assume that their future is at best, cloudy. Like many junk debt collectors, NCO is feeling the pinch of consumers who are smart enough to know that there are laws to protect them from out of statute accounts and use them to their advantage.

If NCO Financial Services contacts you, make them prove up everything that they claim. By law, they must send you a written notice within five days of their initial contact. You then have thirty days to dispute the validity of any account they attempt to collect. Validating debts is a time consuming and expensive task for any junk debt buyer. Make them spend the time and expense necessary to validate these alleged accounts in accordance with the federal laws in place to protect your consumer rights.

NEVER give a debt collector your bank account or credit card information; you could lose your money. Contact us for advice and referral to local consumer law professionals if you feel NCO Financial is violating the law or your consumer rights.

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CONSUMER ALERT!  May 21, 2008

Asta Funding/Palisades Collections Losing Money

Asta Funding reported a $7.7 million dollar second quarter loss this week. Last month, the company borrowed more than $8 million dollars from the Stern family who are the majority stockholders of Asta/Palisades.

Asta Funding/Palisades Collections are junk debt buyers out of Englewood Cliffs, NJ. Last year they purchased a large portfolio from the Wolpoff & Abramson affiliated organizations that included; Great Seneca Financial, Platinum Financial Services, Monarch Capital, Colonial Credit, Centurion Capital, Sage Financial and Hawker Financial. The price, estimated at 4.34 cents on the dollar, which contained a large number of accounts where little or no valid documentation was included.

Asta/Palisades manufacture documents they use in court filings by a nation-wide group of commission lawyers who are paid to file suits. Consumers have learned how to successfully challenge these suits, which has resulted in higher legal costs and far less court wins on the debts which continue to lose value as they age. Junk debt collectors such as Asta/Palisades only collect on 5-10% of purchased junk debts, which leaves them with a limited profit margin.

Consumers and consumer law professionals are increasingly challenging the validity of the suits filed, as courts are requiring more junk debt collectors to provide legal documentation that gives validity to their claim. Since Asta/Palisades churns out their own paperwork on the majority of these purchase debts, that problem continues to escalate and work against them.

Couple that with the inefficiency and poor quality of the lawyers used in attempting to litigate these cases, it is easy to understand why Asta/Palisades is treading in rough waters and the forecast is not good. One of the main areas for profit on these type debt suits are the high number of consumers who fail to respond to the lawsuits, which result in default judgments. If more consumers were to answer these suits, the numbers of dismissals is likely to increase due to the fact of the poor quality of the documents filed and the inability of the commissioned appearance attorneys to present any valid legal argument. Consumers should always respond to these lawsuits, to challenge everything they allege as is widely known that Asta/Palisades have a difficult time in proving their claims.

Junk debt buyers are paying much more for accounts and looking for ways to cut costs. More and more are shutting down call centers, moving them to India. Others are finding it more profitable to simply use the rent-a-lawyer networks and try to collect on default judgments. Many are getting desperate to the point of collecting on accounts that date back into the 90’s, to keep the cash flowing. Consumers should never take claims made by junk debt collectors like Asta/Palisades at face value. They have proven that the court filings they make, can be defeated by almost anyone who hires a consumer law professional or is competent enough to challenge the validity of their claims. Junk debt buyers across America are finding that consumers have become more sophisticated and their ability to roll the dice on these 4.34 cents on the dollar is not the gamble they once thought.
 

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IRS Ends Credit Counselors' Tax Exemption